Return Mail Inc. v. United States Postal Service

On June 20, 2019, the United States Supreme Court held that government entities could not be considered “persons” entitled to challenge patents owned by others before the Patent Trial and Appeal Board (PTAB).

The America Invents Act provides that “a person who is not the owner of a patent” can request inter partes review or post grant review of a granted patent by the PTAB. These proceedings differ as to the grounds on which the patent may be challenged and the time period within which such a challenge may be lodged. A further provision of the America Invents Act provides that a person who has been charged or sued for infringement of a patent, claiming a method for performing data processing or other operations used in the management of a financial product or service, may request “Covered Business Method Review” in which the broader grounds for a challenge set out for post grant review may be utilized. The requirement that a post grant review challenge must be brought within nine months of the grant of the patent does not apply.

Return Mail owns a patent on a method for handling mail that cannot be delivered. It held negotiations with the U.S. Postal Service (USPS) for grant of a license under the patent but no agreement was reached. The patent owner sought compensation for the government’s use of the patented method by an action in the Court of Claims under 28 USC 1489. The USPS challenged the validity of the patent by way of a request for Covered Business Review. The patent owner initially raised two procedural issues:

whether use by the government was an “infringement” because the government always has a right to use a patented method subject to its paying compensation and;

whether the government can be considered a “person” under the relevant statutory provisions. The Court of Appeals for the Federal Circuit decided against the patent owner on both issues. The patent owner petitioned the Supreme Court for certiorari on both points. The Supreme Court denied certiorari on the first of these but agreed to consider the question of whether the government could be considered to be a “person.”

After review of a number of statutes, including the Patents Act and the America Invents Act, the majority of the Supreme Court held that there was no definite rule of statutory interpretation as to whether the term “person” included the government, but there was a presumption that it did not unless Congress had indicated otherwise. This being the case, the Court had to try to determine Congress’s intent when enacting the America Invents Act. By a 5-3 majority in an opinion written by J. Sotomayor, the Supreme Court held that it could not determine that Congress intended to include the government within the definition of a “person” for the purposes of challenging the validity of granted patents before the PTAB. She saw no oddity in Congress affording nongovernmental actors an expedient route that the Government does not also enjoy for heading off potential infringement suits. She noted:

Those other actors face greater and more uncertain risks if they misjudge their right to use technology that is subject to potentially invalid patents. Most notably, §1498 restricts a patent owner who sues the Government to her “reasonable and entire compensation” for the Government’s infringing use; she cannot seek an injunction, demand a jury trial, or ask for punitive damages, all of which are available in infringement suits against nongovernmental actors under §271(e)(4). Thus, although federal agencies remain subject to damages for impermissible uses, they do not face the threat of preliminary injunctive relief that could suddenly halt their use of a patented invention, and they enjoy a degree of certainty about the extent of their potential liability that ordinary accused infringers do not. Because federal agencies face lower risks, it is reasonable for Congress to have treated them differently.

Furthermore, excluding federal agencies from the AIA review proceedings avoids the awkward situation that might result from forcing a civilian patent owner (such as Return Mail) to defend the patentability of her invention in an adversarial, adjudicatory proceeding initiated by one federal agency (such as the Postal Service) and overseen by a different federal agency (the Patent Office).

Consequently, the Court was unpersuaded that the Government’s exclusion from the review proceedings is sufficiently anomalous to overcome the presumption that the Government is not a “person” under the Act.

The dissent, authored by J. Breyer would have found that giving the government the right to challenge granted patents would fulfil the objectives of the America Invents Act to improve the quality of patents and make the patent system more effective and that since the government could otherwise be a full participant in the patent system, there was no reason to think that Congress intended to exclude the government from this particular aspect of it.